LME to consider replacing warehouse rent caps with fixed daily load-out rates

The London Metal Exchange said on Monday that existing caps on rent charged by its network of warehouses could be replaced with a fixed daily load-out rate.

As part of a consultation on proposed enhancements to its physical market infrastructure, the LME said the current system could be replaced with a requirement to load out 1.5% of metal on warrant – or available to the market – on a daily basis.

Under the current system, rent is lowered to zero if a warehouse fails to load out the required metal within 80 days.

Reuters reported in early 2025 that the exchange planned to launch a consultation on revamping its storage rules to tackle warehouse gridlock.

The LME also said in Monday’s statement it was interested in views on whether so-called “evergreen” rent deals should be ended. An evergreen rent deal entitles an entity that places metal on warrant in an LME warehouse to a share of the rent collected from the new metal owner.

The consultation will also reassess the need for aluminum to be stored indoors and whether warehouses should be located in areas of net consumption.

(By Tom Daly and Pratima Desai; Editing by Diti Pujara)